No easy escape from financial crisis

August 13, 2011

Tea party conservatives have been told to accept their victory and go home. They really took it to President Barack Obama and all the old liberals in Congress, some contend.

“The winner is the tea party,” said conservative commentator Charles Krauthammer on Fox News. “They have changed the debate in the country. I think they ought to do what George Aiken (former Vermont governor and senator) advocated in the worst days of the Vietnam War: Declare victory and go home. There will be another fight a year from now, Obama is losing it, and I think that’s where the big payoff will be, and that’s when the country will decide what it wants to do about debt and also about the size of government.”

That, unfortunately, may not be the case. If it is not, we’re in big trouble. The deal to reduce federal spending is a shallow victory at best. We are in for more big spending as usual. If you don’t believe us, take it from another publication which says:

“It (the debt-limit deal) does not actually reduce federal spending. By the end of the 10-year deal, the federal debt would be much larger than it is today.”

The publication went on to explain that government and its debts will continue to grow faster than the economy. The publication blamed federal spending on health care.

This wasn’t National Review Online, or the Wall Street Journal’s conservative editorial page. It was the front page of the Wednesday New York Times, stating as a fact that our economy cannot keep up with federal spending even after tea party freshmen in Congress supposedly terrorized the country until they got their way.

Keep in mind, the story did not just say that we are sinking into debt too fast. If it said only that, an obvious solution might be the tax increases tea party congress members held at bay to the annoyance of Obama. No, the story said “debts will grow faster than the economy.” That means the economy may not be able to afford these debts, even with tax increases. We cannot tax an economy out of that which it does not produce, and taxes stand to curb production.

Few individuals want the country to default on its obligations, and at least for the moment we have dodged that crisis. But there is no easy escape from this financial crisis. Something has to give. As Kentucky Sen. Rand Paul said, we have jumped off a cliff.

“At best, it slows us from going over it at 80 mph to going over it at 60 mph,” Paul wrote in an open letter explaining his opposition to the debt-limit deal. Eventually, we will get serious one way or another.

We finally get this under control by the will of Congress and the president, or we will do so by the very real and unavoidable forces that stop governments big and small from living grossly beyond the means of the people who support them.